NEW YORK December 19, 2017 Jefferies Group LLC today announced financial results for its fiscal fourth quarter and full year 2017.

Transcription

1 JEFFERIES REPORTS RECORD 2017 NET REVENUES AND NET INCOME LED BY 48% INCREASE IN INVESTMENT BANKING NET REVENUES AND 19% INCREASE IN TOTAL EQUITIES AND FIXED INCOME NET REVENUES NEW YORK December 19, 2017 Jefferies Group LLC today announced financial results for its fiscal fourth quarter and full year Highlights for the twelve months ended November 30, 2017: Record Total Net Revenues of $3.20 billion Record Investment Banking Net Revenues of $1.76 billion Total Equities and Fixed Income Net Revenues of $1.42 billion Earnings Before Income Taxes of $505 million Record Net Earnings of $358 million Highlights for the three months ended November 30, 2017: Total Net Revenues of $823 million Record Investment Banking Net Revenues of $529 million Total Equities and Fixed Income Net Revenues of $289 million Earnings Before Income Taxes of $142 million Net Earnings of $90 million Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman, Chairman of the Executive Committee, commented: We are pleased that Jefferies' 2017 net revenues and net income represent the best results in our 55-year history. Our strategy of prioritizing expansion of our investment banking effort continues to succeed and should yield further growth over the next several years. The competitive landscape continues to provide opportunities for Jefferies to grow further by leveraging the unique blend of our non-bank Wall Street culture and business model, deep and broad sectoral expertise, and global geographic reach in investment banking, equity and fixed income trading, and research. We enter 2018 with strong momentum throughout our Company. Our fourth quarter performance was driven by $529 million in Investment Banking net revenues. These quarterly record Investment Banking results reflect solid contributions from equity and debt capital markets, strong performance in our merger and acquisition advisory business, and broad participation across our industry groups and regional efforts. Our Equities net revenues of $194 million were solid, while our Fixed Income net revenues of $95 million are reflective of a period of lighter volumes, particularly in November, and narrower bid - offer spreads. We would like to express our sincere thanks to our 3,450 employee-partners around the globe for their commitment, hard work, loyalty, integrity and dedication in serving our clients and Leucadia's shareholders. The attached financial tables should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended August 31, 2017, our Annual Report on Form 10-K for the year ended November 30, 2016 and our amended Annual Report on Form 10-K/A for the year ended November 30, Amounts herein pertaining to November 30, 2017 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, This release contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Forward-looking statements include statements about our future results and performance, including our future market share and expected financial results. It is possible that the actual results may differ materially from the anticipated results indicated in these forward-looking statements. Please refer to our most recent Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from those projected in these forward-looking statements. 1

2 Jefferies, the world's only independent full-service global investment banking firm focused on serving clients for over 50 years, is a leader in providing insight, expertise and execution to investors, companies and governments. Our firm provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income and foreign exchange, as well as wealth management, in the Americas, Europe and Asia. Jefferies Group LLC is a wholly-owned subsidiary of Leucadia National Corporation (NYSE: LUK), a diversified holding company. For further information, please contact: Peregrine C. Broadbent Chief Financial Officer Jefferies Group LLC Tel. (212)

3 CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in Thousands) Quarter Ended November 30, 2017 August 31, 2017 November 30, 2016 Revenues: Commissions and other fees $ 155,710 $ 139,082 $ 157,549 Principal transactions 107, , ,362 Investment banking 528, , ,067 Asset management fees and investment income from managed funds 4,769 5,465 1,319 Interest 245, , ,002 Other 39,625 12,371 26,661 Total revenues 1,081,499 1,048, ,960 Interest expense 258, , ,191 Net revenues 822, , ,769 Non-interest expenses: Compensation and benefits 455, , ,451 Non-compensation expenses: Floor brokerage and clearing fees 41,257 44,869 42,946 Technology and communications 73,817 72,440 66,396 Occupancy and equipment rental 25,759 27,736 26,635 Business development 27,661 23,125 25,405 Professional services 31,167 25,007 29,763 Other 25,200 22,318 26,644 Total non-compensation expenses 224, , ,789 Total non-interest expenses 680, , ,240 Earnings before income taxes 142, ,264 96,529 Income tax expense 52,331 38,439 9,454 Net earnings 89,949 83,825 87,075 Net earnings (loss) attributable to noncontrolling interests (105) Net earnings attributable to Jefferies Group LLC $ 89,913 $ 83,815 $ 87,180 Pretax operating margin 17.3% 15.3% 13.0% Effective tax rate (1) 36.8% 31.4% 9.8% (1) The effective tax rate for the three months ended November 30, 2016 was impacted by revisions to previously forecasted results. 3

4 CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in Thousands) Twelve Months Ended November 30, 2017 November 30, 2016 Revenues: Commissions and other fees $ 593,257 $ 611,574 Principal transactions 800, ,652 Investment banking 1,764,285 1,193,973 Asset management fees and investment income from managed funds 16,463 31,062 Interest 905, ,838 Other 98,316 19,724 Total revenues 4,178,582 3,233,823 Interest expense 980, ,209 Net revenues 3,198,109 2,414,614 Non-interest expenses: Compensation and benefits 1,829,096 1,568,948 Non-compensation expenses: Floor brokerage and clearing fees 179, ,205 Technology and communications 279, ,396 Occupancy and equipment rental 102, ,133 Business development 99,884 93,105 Professional services 114, ,562 Other 87,870 79,293 Total non-compensation expenses 864, ,694 Total non-interest expenses 2,693,185 2,384,642 Earnings before income taxes 504,924 29,972 Income tax expense 147,340 14,566 Net earnings 357,584 15,406 Net earnings (loss) attributable to noncontrolling interests 86 (28) Net earnings attributable to Jefferies Group LLC $ 357,498 $ 15,434 Pretax operating margin 15.8% 1.2% Effective tax rate 29.2% 48.6% 4

5 SELECTED STATISTICAL INFORMATION (Amounts in Thousands, Except Other Data) Quarter Ended November 30, 2017 August 31, 2017 November 30, 2016 Revenues by Source Equities $ 194,426 $ 176,789 $ 175,960 Fixed income 94, , ,423 Total Equities and Fixed income 289, , ,383 Equity 122,424 86,081 62,085 Debt 174, , ,706 Capital markets 296, , ,791 Advisory 231, , ,276 Total Investment banking 528, , ,067 Asset management fees and investment income from managed funds: Asset management fees 4,122 4, Investment income from managed funds 647 1, Total 4,769 5,465 1,319 Net revenues $ 822,610 $ 800,692 $ 741,769 Other Data Number of trading days Number of trading loss days Average firmwide VaR (in millions) (1) $ 5.29 $ 6.51 $ 8.46 (1) VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30,

6 SELECTED STATISTICAL INFORMATION (Amounts in Thousands, Except Other Data) Twelve Months Ended November 30, 2017 November 30, 2016 Revenues by Source Equities $ 799,451 $ 549,553 Fixed income 617, ,026 Total Equities and Fixed income 1,417,361 1,189,579 Equity 344, ,207 Debt 649, ,576 Capital markets 994, ,783 Advisory 770, ,190 Total Investment banking 1,764,285 1,193,973 Asset management fees and investment income (loss) from managed funds: Asset management fees 20,490 26,412 Investment income (loss) from managed funds (4,027) 4,650 Total 16,463 31,062 Net revenues $ 3,198,109 $ 2,414,614 Other Data Number of trading days Number of trading loss days Average firmwide VaR (in millions) (1) $ 7.79 $ 7.91 (1) VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30,

7 FINANCIAL HIGHLIGHTS (Amounts in Millions, Except Where Noted) Quarter Ended November 30, 2017 August 31, 2017 November 30, 2016 Financial position: Total assets (1) $ 39,706 $ 39,358 $ 36,941 Average total assets for the period (1) $ 47,058 $ 45,311 $ 43,412 Average total assets less goodwill and intangible assets for the period (1) $ 45,215 $ 43,467 $ 41,560 Cash and cash equivalents (1) $ 5,164 $ 4,807 $ 3,529 Cash and cash equivalents and other sources of liquidity (1) (2) $ 6,709 $ 6,191 $ 5,303 Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) 16.9% 15.7% 14.4% Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2) 17.7% 16.5% 15.1% Financial instruments owned (1) $ 13,998 $ 14,037 $ 13,810 Goodwill and intangible assets (1) $ 1,843 $ 1,841 $ 1,847 Total equity (including noncontrolling interests) (1) $ 5,760 $ 5,655 $ 5,371 Total Jefferies Group LLC member's equity (1) $ 5,759 $ 5,654 $ 5,370 Tangible Jefferies Group LLC member's equity (1) (3) $ 3,916 $ 3,813 $ 3,523 Level 3 financial instruments: Level 3 financial instruments owned (1) (4) $ 328 $ 348 $ 413 Level 3 financial instruments owned - % total assets 0.8% 0.9% 1.1% Level 3 financial instruments owned - % total financial instruments (1) 2.3% 2.5% 3.0% Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity 8.4% 9.1% 11.7% Other data and financial ratios: Total long-term capital (1) (5) $ 11,162 $ 11,038 $ 10,501 Leverage ratio (1) (6) Tangible gross leverage ratio (1) (7) Number of trading days Number of trading loss days Average firmwide VaR (8) $ 5.29 $ 6.51 $ 8.46 Number of employees, at period end 3,450 3,438 3,329 7

8 FINANCIAL HIGHLIGHTS - FOOTNOTES (1) Amounts pertaining to November 30, 2017 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, (2) At November 30, 2017, other sources of liquidity include high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities of $1,031 million, in aggregate, and $514 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from our financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2017 were $1,083 million and $301 million, respectively, and at November 30, 2016, were $1,455 million and $319 million, respectively. (3) Tangible Jefferies Group LLC member's equity (a non-gaap financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors. (4) Level 3 financial instruments represent those financial instruments classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned. (5) At November 30, 2017, August 31, 2017 and November 30, 2016, total long-term capital includes our long-term debt of $5,403 million, $5,383 million and $5,131 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by the amount of debt maturing in less than one year, as applicable. (6) Leverage ratio equals total assets divided by total equity. (7) Tangible gross leverage ratio (a non-gaap financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio. (8) VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30,